BitPesa Will Remain Disconnected From M-Pesa As Court Case Against Safaricom Continues

Eric Mugendi

15th December 2015

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Following a hearing at the Milimani Law Courts, Safaricom will not be compelled to reinstate access to the M-Pesa mobile money service for BitPesa, but the case is far from over. This decision comes after the mobile operator was taken to court after allegedly using intimidation to get Lipisha to stop services to BitPesa, in a bid to block the latter’s access to M-Pesa.

BitPesa provides a service that allows users to send money in bitcoin, which would then be converted and received in Kenya Shillings. BitPesa was enjoined in the suit with Lipisha, an automated mobile payments service that allows businesses to collect, automate and integrate payments from customers and clients using mobile money.

High Court Justice Joseph Onguto decided that Lipisha’s case can continue, but the motion to oblige Safaricom to restore BitPesa’s access to M-Pesa for the duration of the trial was dismissed. The best way forward, according to Justice Onguto, would be for the dispute to be resolved through arbitration.

The court ruled that Safaricom was justified to suspend the services of Lipisha and Bitpesa, after Safaricom raised concerns over how the two were conducting their businesses. However, the suspension of services was not justified.

“The Commercial Agreement between Lipisha Consortium and Safaricom reveals that Safaricom could suspend, not terminate the services it offers to the plaintiff, even without notice and for any valid reason,” said Justice Onguto.

“The Court has not dismissed BitPesa’s case, but rather has ruled only that BitPesa is strong enough as a company that it does not require access to M-Pesa to survive during the course of the case,” BitPesa CEO Elizabeth Rossiello said in a statement.

In response to Lipisha and BitPesa’s suit, Safaricom said that BitPesa acted in violation of its anti-money laundering requirements by trading in Bitcoin, which is not recognized as legal tender by the Central Bank of Kenya. As a result, the virtual currency exchanger would have to get clearance from the CBK in order to continue offering its service.

Responding to the ruling, Ms Rossiello said that the fact that a major operator like Safaricom was willing to take on their startup in court was a win for them.

“The fact that Safaricom has moved against us shows that we have already won,” Ms Rossielo said following the decision. “This is about BitPesa standing strong against an incumbent, with its internal operations and compliance policies laid bare before the court, proud in its graduation from startup to scalable contender in the marketplace.”

Ms Rossielo was confident that the Central Bank would not be involved in the matter, since it did not touch on the legality of BitPesa’s operations.

“This case is not about the legality of Bitcoin in Kenya. Rather it is about BitPesa standing strong against an incumbent,” stated Ms Rossiello.

However, the Central Bank of Kenya has since issued a statement distancing itself from bitcoin and other cryptocurrencies.

Despite the M-Pesa setback, BitPesa added that they are still operating with Airtel Money in Kenya. “Airtel Money continues to power customer transactions 24/7 alongside our other bank payment channels, and has offered us payout capability in 17 countries. We look forward to continuing to expand our footprint across Africa.”

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